Pa. considering a big change in state education

By Heather Stauffer,
April 8, 2014 at 1:00 PM

On one point there is widespread agreement in the Pennsylvania State System of Higher Education: It is time for serious conversations.

A focus of those conversations will, of course, be the recently proposed state Senate Bill 1275, which would allow some of the stronger members of the 14-university system to buy their way out and become state-related institutions.

Closely related, particularly as the state budget negotiations heat up, is the issue of state appropriations for the system, which have been flat at $412.75 million since Gov. Tom Corbett took office in 2011. In 2010-11 and 2009-10, the amount of state funding to PASSHE was $439.74 million and $455.18 million respectively, augmented both years by $38.158 million in federal American Recovery and Reinvestment Act funds.

"The state-owned universities now receive little more than 25 percent of their operating support from the state. Several decades ago, the state supported two-thirds of our operating costs," said John M. Anderson, who is beginning his second year as president of PASSHE member Millersville University in Lancaster County.

The current level of state support is closer to that of a state-related university, Anderson said, noting that PASSHE's new chancellor, Frank Brogan, recently testified "that the very existence of some PASSHE universities is in doubt unless the revenue picture changes dramatically."

That means, Anderson said, that individual campuses need more local control over costs and revenue to create a sustainable future.

However, that doesn't mean Anderson is endorsing SB 1275.

"I believe the proposed legislation is well-intended but very complex with many implications to consider," he said. "This could be a wonderful opportunity for Millersville and other PASSHE universities, or it could fail to meet the objective with grave impact on public higher education throughout the commonwealth."

Anderson said Millersville estimates the depreciated value of its property — which under the legislation it would have to repay the state over 30 years if it leaves the system — at approximately $120 million.

B. Michael Schaul, chairman of the Shippensburg University council of trustees, declined to estimate the amount it would have to pay to leave the system. But, like Anderson, he said the university's leadership is approaching the issue seriously and in consultation with all constituencies of its campus family.

The question confronting the universities is not just what becoming state-related would mean for them but also how PASSHE is changing under Brogan, whose leadership has drawn much acclaim during his brief tenure, and how other members exiting the system might affect that future.

Brogan has expressed concerns about the legislation, saying it may have unintended negative effects on the system and its students. As the issue proceeds, he said, "I would hope that the students' interests would be paramount."

"The board of governors and the 14 universities in the state system are committed to providing the highest-quality education at the most affordable cost to all of our students," said PASSHE board Chairman Guido M. Pichini. "We are evolving the state system to better support our universities as they meet the changing needs of those students, their families and all Pennsylvanians — creating a better balance between system coordination and local decision making."

PASSHE spokesman Kenn Marshall noted that on two criticisms of the system — that its shared services are too costly and that its funding system is not fair — action is already being taken.

"Our universities collaborate to share the costs of certain services, such as legal, human resources, payroll," he said. "An outside firm is currently evaluating those services in relation to the fees paid by the institutions that utilize them. Approximately 112 staff members are funded by the universities to provide shared services and to support joint academic centers. The report will result in recommendations for any changes that should be made."

The allocation model PASSHE has used over the past decade was largely based on enrollment, and changing demographics are impacting each university differently, resulting "in some unexpected, one-time adjustments last year," he said.

The board has been updating the model to afford the universities more predictability, and a task force has already made some early recommendations that led to the board providing more flexibility on local pricing.

The proposal as presented

Pa. Senate Bill 1275, the so-called secession legislation, has been presented explicitly as a starting point for discussion. So if the concept gains traction, it may well be with an altered formula.

However, as introduced in mid-March, highlights of the proposal were as follows:

• There are 14 state-owned universities in PASSHE, including Millersville and Shippensburg. Qualifying universities would be allowed to leave and become state-related institutions like Penn State and Temple University.

• To qualify, universities must have enrollment of at least 7,000 students and the financial ability to compensate the state for the depreciated value of their property.

• They would pay back that value over 30 years, with 70 percent going to PASSHE and 30 percent going to provide financial aid to Pennsylvania residents attending that university.

• Collective bargaining agreements in place at the time of the transfer would remain in place. Upon their expiration, new collective bargaining agreements with professional employees and noninstructional employees would be negotiated by the university’s council of trustees.

• The number of trustees at the universities would increase over time to 35 from 11.